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EU Biodiesel Boom Not Threatening Food Needs

Date:24-Feb-05Country: HOLLANDAuthor: Anna Mudeva

Fediol Director General Pascal Cogels told Reuters he believed Europe would prevent a potential rapeoil deficit in coming years by increasing plantings or boosting imports of other oils and organic matter for production of biofuels.

Demand for rapeoil to produce biodiesel surged in the past year as biofuels production capacity has risen sharply thanks to EU measures to reduce the bloc's dependence on fossil fuel oil imports and cut greenhouse emissions.

"We don't need to be alarmed. Some forecasts such as, by 2010 the market would be captured by biodiesel made only of rapeoil, are absurd," Cogels said by telephone from Brussels, where Fediol is based.

"I expect demand for rapeoil to stabilise in coming years and the biodiesel industry to diversify production with more imported ethanol or more soyoil and palm oil. We should also look at options to increase production of rapeseed," he said.

Biofuels, which turn organic matter into energy, are seen as an environmentally responsible alternative to fossil fuels. EU governments are trying to promote biofuel use, notably biodiesel derived from vegetable oils, and ethanol, which can be produced from grains, sugar or biomass.

CAPACITY RISES

Fediol estimated total EU biodiesel output capacity at up to 2.3 million tonnes last year and forecast it would exceed 2.5 million tonnes by the end of this year.

It put the EU's biodiesel output at some 2 million tonnes last year, 80 percent of which was made of rapeoil.

Cogels said that about 40 percent of Europe's bumper 15.1 million tonne rapeseed harvest last year was used for production of biodiesel.

Demand for rapeoil for food needs has also been rising in the EU in recent years to make up for a drop in consumption of soyoil because producers are reluctant to import soybeans, almost all of which are genetically engineered.

Close to 80 percent of soybean output in the US -- the world's top grower -- is genetically engineered.

Some food industry experts fear that the expanding biodiesel market could consume most of the rapeoil in the EU -- the world's second largest consumer and importer of edible oils -- leaving little for the increasing food needs.

But Cogels quoted biodiesel industry officials as forecasting that the share of fuels made of other organic products would also rise, and some 10 to 15 percent of Europe's biofuels could be produced of palm oil in about six years.

To respond to the increasing rapeoil demand, many crushers are also planning to expand capacity mainly in east European countries and also possibly in east Germany, Cogels said. Last month, US agri-business giant Cargill said it planned to double its oilseed crushings in Germany.

Fediol also sees a trend for more investment in expanding or building new sunseed crushing capacity in eastern Europe, including Russia, Ukraine and Romania, which are the main suppliers of sunseed to western Europe.